Agenda-setting intelligence, analysis and advice for the global fashion community.
NEW YORK, United States — Michael Kors Holdings Ltd. fell the most in more than two months in New York trading after Credit Suisse Group AG cut its rating on the stock, saying slowing handbag demand has led to a "dramatic" increase in discounting.
Christian Buss, a New York-based analyst for Credit Suisse, lowered his rating to neutral from the equivalent of a buy. He now expects the stock to reach $79 over the next 12 months, compared with a previous target of $103.
“A combination of rising inventories and softening traffic has led to a dramatic step up in promotional activity across Michael Kors stores, e-commerce sites and premium wholesale distribution partners,” he said in the report.
The shares fell as much as 7.1 percent to $67.81, the biggest intraday decline since Nov. 4. Michael Kors’s stock had dropped almost 8 percent last year, dragged down by concern that the once high-flying fashion house is suffering a slowdown.
ADVERTISEMENT
Michael Kors’s comparable-store sales rose 16 percent in the most recently reported quarter, missing estimates of almost 19 percent. The North America region grew almost 11 percent, compared with the more than 15 percent that was projected.
In another move that stoked concerns among investors, top shareholder Sportswear Holdings Ltd. announced plans to sell its stake in September. The decision followed an almost fourfold gain in the stock since its initial public offering in 2011.
By Craig Giammona. Editors: Nick Turner and Niamh Ring.
